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AGENCY:

SUMMARY:

The Department of Commerce (the Department) has preliminarily determined that critical circumstances do not exist with respect to imports of certain pneumatic off-the-road (OTR) tires from the People's Republic of China (PRC).

SUPPLEMENTARY INFORMATION:

Period of Investigation

The period for which we are measuring subsidies, or the period of investigation (P01), is calendar year 2006.

Scope of Investigation

The products covered by the scope of this investigation are new pneumatic tires designed for off-the-road (OTR) and off-highway use, subject to exceptions identified below. Certain OTR tires are generally designed, manufactured and offered for sale for use on off-road or off highway surfaces, including but not limited to, agricultural fields, forests, construction sites, factory and warehouse interiors, airport tarmacs, ports and harbors, mines, quarries, gravel yards, and steel mills. The vehicles and equipment for which certain OTR tires are designed for use include, but are not limited to: (1) Agricultural and forestry vehicles and equipment, including agricultural tractors,[1]
combine harvesters,[2]
agricultural high clearance sprayers,[3]
industrial tractors,[4]
log-skidders,[5]
agricultural implements, highway-towed implements, agricultural logging, and agricultural, industrial, skid-steers/mini-loaders;[6]
(2) construction vehicles and equipment, including earthmover articulated dump products, rigid frame Start Printed Page 21589haul trucks,[7]
front endloaders,[8]
dozers,[9]
lift trucks, straddle carriers,[10]
graders,[11]
mobile cranes, compactors; and (3) industrial vehicles and equipment, including smooth floor, industrial, mining, counterbalanced lift trucks, industrial and mining vehicles other than smooth floor, skid-steers/mini-loaders, and smooth floor off-the-road counterbalanced lift trucks.[12]
The foregoing list of vehicles and equipment generally have in common that they are used for hauling, towing, lifting, and/or loading a wide variety of equipment and materials in agricultural, construction and industrial settings. The foregoing descriptions are illustrative of the types of vehicles and equipment that use certain OTR tires, but are not necessarily all-inclusive. While the physical characteristics of certain OTR tires will vary depending on the specific applications and conditions for which the tires are designed (e.g., tread pattern and depth), all of the tires within the scope have in common that they are designed for off-road and off-highway use. Except as discussed below, OTR tires included in the scope of the petitions range in size (rim diameter) generally but not exclusively from 8 inches to 54 inches. The tires may be either tube-type or tubeless, radial or non-radial, and intended for sale either to original equipment manufacturers or the replacement market. Specifically excluded from the scope are new pneumatic tires designed, manufactured and offered for sale primarily for on-highway or on-road use, including passenger cars, race cars, station wagons, sport utility vehicles, minivans, mobile homes, motorcycles, bicycles, on-road or on-highway trailers, light trucks, and trucks and buses. The subject merchandise is currently classifiable under Harmonized Tariff Schedule of the United States (HTSUS) subheadings: 4011.20.10.25, 4011.20.10.35, 4011.20.50.30, 4011.20.50.50, 4011.61.00.00, 4011.62.00.00, 4011.63.00.00, 4011.69.00.00, 4011.92.00.00, 4011.93.40.00, 4011.93.80.00, 4011.94.40.00, and 4011.94.80.00. While HTSUS subheadings are provided for convenience and Customs purposes, our written description of the scope is dispositive.

Case History

This investigation was initiated on August 7, 2007. See Certain New Pneumatic Off-the-Road Tires From the People's Republic of China: Initiation of Countervailing Duty Investigation,72 FR 44122 (August 7, 2007) (Initiation Notice). The preliminary determination was published on December 17, 2007. See Certain New Pneumatic Off-the-Road Tires From the People's Republic of China: Preliminary Affirmative Countervailing Duty Determination,72 FR 71360 (December 17, 2007) (Preliminary Determination). On March 11, 2008, Titan Tire Corporation and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy Allied Industrial and Service Workers International Union, AFL-CIO-CLC (Petitioners) alleged that critical circumstances exist with respect to imports of OTR tires from the PRC. See Petitioners' March 11, 2008 submission (Allegation of Critical Circumstances). On March 28, 2008, GPX/Hebei Starbright Tire Co., Ltd. (Starbright), Tianjin United Tire & Rubber International Co., Ltd. (TUTRIC), and Guizhou Tyre Co., Ltd. (Guizhou), the respondents, timely submitted data for the requested time period. Pursuant to the Department's supplementary request for their data in quantity of tires, Starbright and TUTRIC provided additional data on April 2, 2008.

Comments of the Parties

In their Allegation of Critical Circumstances, Petitioners contend there have been massive imports of subject tires since the filing of the petition, which have been exported by Starbright, TUTRIC, and Guizhou. Petitioners provide U.S. Customs and Border Protection Automated Manifest entry data of OTR tires for each of the three respondents. Petitioners argue that these data demonstrate that Starbright's, TUTRIC's, and Guizhou's imports increased more than the fifteen percent required to be considered “massive” under section 351.206(h)(2) of the Departments regulations. See Allegation of Critical Circumstances, Attachment 1.

In addition, Petitioners allege that there is a reasonable basis to believe or suspect that alleged subsidies in this investigation are inconsistent with the WTO Agreement on Subsidies and Countervailing Measures (Subsidies Agreement). See Allegation of Critical Circumstances at 5-6. With regard to the subsidy programs, Petitioners allege that a number of the subsidies under investigation are contingent on export performance or import substitution.[13]
Petitioners note that while none of these programs were found to provide a countervailable benefit in the preliminary determination, a critical circumstances determination need only be based on “alleged” countervailable subsidies (not necessarily preliminarily countervailable) that are inconsistent with the Subsidies Agreement. In addition, Petitioners argue that even if the Department only considers the preliminarily countervailed subsidies in making its preliminary critical circumstances determination, the Department still should consider their allegation in the final critical circumstances determination.[14]

Analysis

Section 703(e)(1) of the Tariff Act of 1930, as amended (“the Act”), provides that the Department will preliminarily determine that critical circumstances exist if there is a reasonable basis to believe or suspect that: (A) the alleged countervailable subsidy is inconsistent with the Subsidies Agreement, and (B) there have been massive imports of the subject merchandise over a relatively short period.

In determining whether an alleged countervailable subsidy is inconsistent with the Subsidies Agreement, the Department limits its critical circumstances findings to those Start Printed Page 21590subsidies contingent on export performance or use of domestic over imported goods (i.e., those prohibited under Article 3 of the Subsidies Agreement).[15]

Section 351.206(h)(1) of the Department's regulations provides that, in determining whether imports of the subject merchandise have been “massive,” the Department normally will examine: (i) The volume and value of the imports; (ii) seasonal trends; and (iii) the share of domestic consumption accounted for by the imports. In addition, the Department will not consider imports to be massive unless imports during the “relatively short period” (“comparison period”) have increased by at least 15 percent compared to imports during an “immediately preceding period of comparable duration” (“base period”). See19 CFR 351.206(h)(2).

Section 351.206(i) of the Department's regulations defines “relatively short period” as normally being the period beginning on the date the proceeding commences (i.e., the date the petition is filed) and ending at least three months later. However, if the Department finds that importers, exporters, or producers had reason to believe, at some time prior to the beginning of the proceeding, that a proceeding was likely, then the Department may consider a period of not less than three months from that earlier time. See 19 CFR 35 1.206(i).

In our preliminary determination, the subsidies found countervailable were not determined to be contingent on export performance or import substitution.[16] See Preliminary Determination. Thus, pursuant to section 703(e)(1)(A) of the Act, the first requirement needed to affirmatively find critical circumstances has not been met, and the Department need not reach the issue of massive imports.

However, at the time of the preliminary determination, there were four programs for which additional information was required before the Department could make any finding regarding their countervailability. These programs do not appear to be contingent on export performance or import substitution. However, if in the final determination the Department finds that any of these four programs, or any of the previously alleged subsidy programs, are countervailable and are contingent on export performance or import substitution, the Department will revisit the issue of massive imports as necessary.

In the event that the Department needs to determine whether there have been massive imports, we have collected the following information: (1) The evidence presented in the Petitioners' March 11, 2008 submission; (2) Respondents' monthly shipment data for November 2006 to November 2007; and (3) U.S. import data for the subject merchandise for 2004-2007, as reported by the International Trade Commission (ITC) (http://dataweb.usitc.gov). The ITC data relied on in this analysis do not necessarily exclude those products not falling within the scope of this proceeding (i.e., OTR tires for light and medium trucks/buses or with a rim diameter equal to or exceeding 39 inches).

Conclusion

Given the analysis above, we preliminarily determine critical circumstances do not exist for imports of OTR tires from the PRC. We will make a final determination concerning critical circumstances for OTR tires from the PRC when we make our final countervailable subsidy determination in this investigation, no later than July 7, 2008.

International Trade Commission Notification

In accordance with section 703(f) of the Act, we will notify the ITC of our determination. This determination is issued and published pursuant to sections 703(f) and 777(i)(1) of the Act.

Start Signature

Dated: April 11, 2008.

David M. Spooner,

Assistant Secretary for Import Administration.

End SignatureEnd Supplemental Information

Footnotes

1.
Agricultural tractors are four-wheeled vehicles usually with large rear tires and small front tires that are used to tow farming equipment.

6.
Skid-steer loaders are four-wheel drive vehicles with the left-side drive wheels independent of the right-side drive wheels and lift arms that lie alongside the driver with the major pivot points behind the driver's shoulders. Skid-steer loaders are used in agricultural, construction and industrial settings.

7.
Haul trucks, which may be either rigid frame or articulated (i.e., able to bend in the middle) are typically used in mines, quarries and construction sites to haul soil, aggregate, mined ore, or debris.

9.
A dozer is a large four-wheeled vehicle with a dozer blade that is used to push large quantities of soil, sand, rubble, etc., typically around construction sites. They can also be used to perform “rough grading” in road construction.

11.
A grader is a vehicle with a large blade used to create a flat surface. Graders are typically used to perform “finish grading.” Graders are commonly used in maintenance of unpaved roads and road construction to prepare the base course onto which asphalt or other paving material will be laid.

12.
A counterbalanced lift truck is a rigid frame, engine-powered machine with lift arms that has additional weight incorporated into the back of the machine to offset or counterbalance the weight of loads that it lifts so as to prevent the vehicle from overturning. An example of a counterbalanced lift truck is a counterbalanced fork lift truck. Counterbalanced lift trucks may be designed for use on smooth floor surfaces, such as a factory or warehouse, or other surfaces, such as construction sites, mines, etc.

13.
Specifically, Petitioners cite the foreign currency retention scheme, preferential tax policies for export-oriented FIEs, income tax refund for reinvestment of FIE profits in export-oriented enterprises, tax benefits for FIEs in encouraged industries that purchase domestic origin machinery, and VAT export rebates. In addition, with respect to the Provision of Land for Less Than Adequate Remuneration to SOEs, we noted in the Preliminary Determination that business proprietary information indicated that local authorities may have based their approval of Hebei Tire's asset sale in part on the export performance of Starbright (see Section B of the Preliminary Determination).

16.
The programs preliminarily determined to provide a countervailable benefit are Government Policy Lending, Provision of Land for Less Than Adequate Remuneration to SOEs, Tax Subsidies to FIEs in Specifically Designated Geographic Areas, Local Income Tax Exemption and Reduction Programs for “Productive” PIEs, VAT and Tariff Exemptions for FIEs and Certain Domestic Enterprises Using Imported Equipment in Encouraged Industries, the State Key Technologies Renovation Project Fund, and Provision of Natural and Synthetic Rubber by SOEs for Less Than Adequate Remuneration.